A court should be cautious in granting injunctions against public authorities and should consider the balance of convenience, public interest, and public policy.

This appeal arises out of the order dated 24.8.93 passed by the Assistant District Judge No.2, Guwahati in Misc (J) Case No. 84 of 1993 arising out of the Title Suit No. 70 of 1993. By the impugned order, the learned Judge granted injunction as prayed for by the plaintiff.

2. The background of the case is that the plaintiff brought a suit against the State of Assam and Director of State Lotteries. The suit was only for permanent injunction as will be evident from the cause title. The prayers which were made are as follows :

(a) to restrain the defendant Nos. 1 and 2 from giving effect to the letter dated 26.6.93;

(b) pass a permanent injunction restraining the defendants, their servants, agents and assign from taking any action against the plaintiff on the basis of the letter dated 30th July, 1993 and also the letter dated 20th August, 1993 and also the letter dated 26.8.93 to rescind, revoke, terminate and cancel! the contract/agreement entered into by the parties as have been detailed in the schedule below.

3. It is stated that the plaintiff entered into an agreement with the State of Assam through the defendant No. 2 on 2.12.91, whereby the plaintiff was appointed as the organising agent for assisting the Government in conducting the lotteries in respect of Assam State Lottery for a period of 3 (three) years from the date of its first draw ie on 6.2.1992. The relevant conditions of the agreement are quoted in paragraph 4 of the plaint. We are not concerned for the disposal of this appeal with those clauses save and except clause 1 which will be discussed later on.

4. That the defendant as per agreement approved 15 numbers of lotteries as given in paragraph 7 of the plaint. The first draw of the lottery was held on 6.2.1992 as per schedule approved by the Government. It is stated that the plaintiff spent a huge sum of money to establish the Assam State Lottery in the market and it was because of the effort and endeavor of the plaintiff that the lottery was organised in a proper manner. Suddenly on 30.7.93 the defendant No. l served a notice on the plaintiff whereby the defendant No. l wanted to terminate the agreement mentioned above. The notice inter alia states as follows :

"Government is deeply concerned about numerous reports received on the harmful effect of lotteries, particularly, the daily draws where the winning last single digit offers a prize, from many parts of the State. Students organisations as well as Women and Social Welfare Organisa­tions have voiced their protests through letters and demonstrations and have expressed their deep anguish on the havoc caused in the lives of the people due to the lotteries.

The Government has considered these and has come to the conclusion that the continuation of State Lotteries is bringing disrepute to the State Government. Therefore as provided under clause 1 of the Agreement signed between the State Government and you on 2nd December, 1991, Government has decided to terminate the agreement entered with you for organising State Lotteries. Before giving effect to this, Government has decided to give you an opportunity of being heard, and if you have anything to say against the proposed action this may be communicated to the undersigned within a period of ten days from the receipt of this letter."

In reply to this notice, a reply was sent on 6.8.93 where the plaintiff stated as follows :

"We hereby give you notice that in case you donot withdraw the threat contained in your letter under reply, we shall hold you responsible for wrongful termination of the contract. In that case, we shall be entitled to damages against loss of profit to us which will be quantified if the necessity so arises. In the meanwhile, we request you to please keep in mind the turnover of the Daily Lotteries, on the basis of which, accor­ding to the judgment of the Hon'ble Supreme Court of India, the loss of profit would be calculated @ li% of the turnover."

Thereafter by letter